LORINC: The Brothers Ford and their Trojan Horse

In the final innings of last week’s budget debate, there was a brief, and predictable, skirmish over a $3 million outlay for “consultants” who will be hired to advise the city on how to contain costs for the Armageddon-like 2012 budget.

“Why are we spending $3 million to second-guess our budget chief?” wondered Councillor Gord Perks in his speech to council. In an interview with CTV, deputy mayor Doug Holyday said the funds will be “well spent” because the consultants will help find cost efficiencies and identify ways to deliver municipal services with fewer staff.

“Management Consultants sought for the Roster include those firms/individuals capable of undertaking complex and often high-profile and/or politically sensitive matters. Assignments will involve issue analysis, identifying optional courses of action to attain improvement or resolution, and recommending solutions and implementation actions [emphasis added].”

The city manager, the document continues, will likely be looking for the following sorts of advice: “Program and Mandate Reviews; Organizational Restructuring; Operational Efficiency Reviews; Business Process Reviews; Productivity and Workflow Analysis; Performance Audits and Reviews; Performance Measurement and Benchmarking; Financial Analysis/Cost-benefit Analysis; Policy Analysis and Advice; and Public Sector Governance.”

As for “deliverables,” the REOI notes that the city manager’s office “may request the Consultant to support their role as the lead responsible for undertaking briefings and relationship management with senior parties including the: Mayor, members of City Council and Committees of Council; Boards of Directors or Executives of organizations in which the City has an interest; City Manager and Deputy City Managers; City divisional and special purpose body staff; and Labour unions and professional associations.”

One doesn’t need to be especially deft at reading government documents to see that the consultants, rather than looking to save a bit of cash on office supplies, will be preparing work-ups on how to outsource city services, as per the political directive of the mayors Ford.

These assessments, moreover, will include detailed, and highly valuable, financial analyses. In other words, the as-yet unnamed consultants will know which potentially privatized operations are likely to fetch the most attractive bids, and what sorts of margins private sector partners might expect to generate.

When the council finally unveils the RFPs for waste management, the financial analysis included in these documents will have been done by the city’s senior waste management officials. They actively monitor their department’s performance relative to other municipalities, as well as private haulers.

It’s a different story for many other municipal services that soon may be teed up for outsourcing. The external consultants will be doing all sorts of due diligence for the first time, ostensibly for the consumption of council and the city manager. But the reality is that these firms, especially the large accounting partnerships [PDF] that tout their expertise in the Triple P world, also have scores of private clients, some of whom may be looking to bid on the services the Fords have pledged to privatize.

A potential for conflicts of interest? You bet.

For the waste management outsourcing process that will play out this year, council, in all likelihood, will employ a fairness commissioner to monitor the tendering process and ensure that bidders stay away from city officials and councillors during crucial moments in the decision-making process.

But how will the city prevent these yet-to-be-selected external consultants from tipping off business clients who may be vying to bid on the municipal services that council ultimately plans to outsource?

The REOI is silent on this point.

In theory, the consultants should be required, at a minimum, to not disseminate the information they gather while they’ve got access to the city’s books and officials. In practice, it could be very tough to police that sort of thing.

The last time these questions arose was during the Bellamy inquiry into the MFP computer leasing scandal of the early 2000s, when city officials, Tory lobbyists and the company’s executives conspired to drive up the price of an outsourced IT contract. Madame Justice Denise Bellamy proposed a range of reforms to the city’s purchasing policies, as well as the establishment of an integrity commissioner.

Lest anyone’s forgotten, Bellamy had several recommendations for the conduct of consultants, including the importance of disclosing “potential conflicts” and the need to “refrain from divulging confidential information” (Rec. 60.g).

The question now is whether council will ask her, or any other independent official (e.g., auditor general Jeff Griffiths), to monitor the extensive outsourcing process that likely will begin with the hiring of the external consultants.

5 comments

While the Fords have made it quite clear that they are in favour of outsourcing as much as possible, it is a stretch to link this REOI specifically to that agenda. In the absence of any information to the contrary, it seems more plausible that the point of this exercise is more mundane – to have an outside consultant perform an analysis of the municipal bureaucracy, with the goal of finding ways to make employees more productive. There’s nothing sinister about looking into whether staff may be performing duplicate functions, following inefficient processes, or simply don’t have enough work to fill the day. It is unreasonable to expect councillors to have the time or expertise to do a review like this, and it would be foolish to ask management to undertake a review of their own business practices. Sometimes an organization needs to go outside to get an honest opinion, which is where the consultants come in.

I’d be a lot happier if the contract was broken up into smaller contracts by department. How one firm can get into the workings of the whole city in sufficient detail is beyond me. They’ll spend the whole $3 million just setting up their terms of reference!

From the linked ethics report: “Councillor Ford struggled with this investigation, the findings and the recommendations. He appeared to genuinely find it difficult to understand how others could feel uncomfortable with his letters or how the fact of lobbyists donating to his personal cause, at his request and with his knowledge of the donations, could compromise the Councillor/lobbyist relationship.”
Great. Just great.

I have nothing against privatization or PPPs per-se. However I would have a lot more confidence in Mr. Ford’s proposals if I thought he had developed this radically divisive proposal through diligent scholarship in the field of economics. It is pretty apparent the guy is not well-read. So we should really be concerned ’cause we do not know who is really is charge at the office of the Mayor of Toronto. Nor do we know in specific terms what agenda they may have. My suggestions, once again, is to refer to “Rob Ford” in quotations marks.

(But didn’t the last mayor have a degree in economics from Harvard before getting his law degree…? And wasn’t he articulate enough to speak for himself…? And formulate his own policies…? Oh, well.)

As for the big consulting and accounting firms, they will be there to brush a coating of credibility and authority across the top of a number of initiatives surrounding privatization. Initiatives which this regime is ideologically committed to undertaking whether or not they actually do improve service.
Remember how much Arthur Andersen made by simply getting a bunch of whip-smart, sociopathic, young MBAs to throw people off welfare during the Harris years? But don’t blame them. These aren’t their ideas. They will just be there to manage the process.

But we do know the City has a giant hole in its budget next year. Why aren’t they panicking? Because the intent of “Rob Ford” is to sell off one or two major City assets for cash, probably at “fire-sale prices” (if you will pardon the cliché).

One of the strategies these guys also like to propose is the monetization of assets, or the partial selling off, of a service. See the article linked below as a for-instance. The London Fire Brigade “monetized” its fleet of fire engines by selling them to a company which then leases them back, maintains them presumably, and which even provides replacement staff when individual firefighters “go pony” as we say at the City, or “skive” as they say in Blighty.

Well that company has a big unpaid tax bill. And the UK tax office is petitioning the courts to sell off London’s fire engines in order to collect on the debt. How will they fight the fires then? With buckets?!

Does anyone remember John Barber’s article in the G&M on how much the City should try to get if they try to sell off the Green P? But the Green P is a cash-cow (another cliché), so why sell it except to realize some kind of short term expediency.

There’s a downside to privatization, and worrying about the consultants’ fees is the least of our concerns.